The oil and gas industry has also been affected by the pandemic, as for the first time in history, US crude oil prices collapsed below $0.
Due to the difficulties arising for the industry, Norway decided to cut oil production by 250,000 barrels per day in June and by 134,000 barrels per day in the second half of 2020.
In the meantime, the start up of production of several fields will be delayed until 2021, resulting to the overall Norwegian production in December 2020 being 300,000 barrels less per day than originally planned by the companies.
Also, the Norwegian Government proposes temporary changes to the petroleum tax system, which means that tax bills are postponed. Oil and gas companies will be allowed to deduct investments, including uplift, from the special tax base immediately.
It is reported that uplift will be reduced from 5.2% for each of the first four years to 10% for the first year only. This will apply to investment costs the companies incur in 2020 and 2021 and to investments included in plans for new developments that are submitted by the end of 2021 and approved by the end of 2022, and until production starts. The companies will be able to have the tax value of losses in the income years 2020 and 2021 refunded.
The liquidity effect of the changes is anticipated to free up as much as NOK 100 billion ($10 billion) for investments in 2020 and 2021.
The Government is also proposing a green restructuring package for the business sector. This will include increases in funding for renewables development and green shipping.
The details of the green restructuring package will be announced when the Government presents a package of measures for its COVID-19 exit strategy towards the end of May.